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Falcon Oil & Gas Ltd. Falcon Oil & Gas Ltd. : Beetaloo Basin Drilling Results Indicate Material Gas Resource

15/02/2017 7:01am

UK Regulatory (RNS & others)


 
TIDMFOG 
 
 
   Falcon Oil & Gas Ltd. ("Falcon"): Beetaloo Basin Drilling Results 
Indicate Material Gas Resource 
 
   DUBLIN, IRELAND--(Marketwired - Feb. 15, 2017) - Falcon Oil & Gas Ltd. 
(TSX VENTURE:FO)(AIM:FOG)(ESM:FAC) is pleased to announce that Origin 
Energy Resources Limited ("Origin"), Falcon's 35% joint venture partner, 
has submitted the Results of Evaluation of the Discovery and Preliminary 
Estimate of Petroleum in Place for the Amungee NW-1H Velkerri B Shale 
Gas Pool ("Report") to the Northern Territory Government. 
 
   The submission follows the completion of extended production testing at 
the Amungee NW-1H exploration well of the "B Shale" member of the Middle 
Velkerri Formation. 
 
   In addition, Origin undertook a resource study based on the Amungee 
NW-1H well results and other key wells in the Beetaloo Basin including 
regional seismic data to determine a 2C contingent gas resource estimate 
for the Middle Velkerri B Shale Pool within EP76, EP98 and EP117. 
 
   Key Details of the Discovery Evaluation Report 
 
   The Report was submitted in compliance with Section 64 of the Northern 
Territory Petroleum Act (2016) and as per the Reporting a Petroleum 
Discovery Guideline. The Report follows the initial submission of the 
notification of discovery and an initial report on discovery in October 
2016. The Report provides the following volumetric estimates and 
recovery / utilisation factor for the B Shale member of the Middle 
Velkerri Formation within permits EP76, EP98, and EP117. 
 
 
 
 
 
               Middle Velkerri B Shale Volumetric Estimates (1) 
                                               Gross      Net Attributable (2) 
                                           Best Estimate     Best Estimate 
Area km(2) (3)                                    16,145                 4,751 
OGIP (TCF)                                           496                   146 
Combined Recovery / Utilisation Factor 
 (4)                                                 16%                   16% 
Technically Recoverable Resource (TCF)                85                    25 
OGIP Concentration (BCF/km(2) )                       31                    31 
(1) The Report and estimates included in the table 
 above were not prepared in accordance with COGEH 
(2) Falcon's working interest is 29.43%, net attributable 
 numbers do not incorporate royalties over the permits 
(3) Area defined by a depth range at a maturity cut-off 
 consistent with the dry gas window within the Beetaloo 
 JV Permits (EP79, EP98, EP117) 
(4) The combined recovery/utilization factor range 
 was applied stochastically to the OGIP range to calculate 
 the range of technically recoverable resource within 
 the Beetaloo JV permits. 
 
 
   Understanding the factors controlling deliverability and recovery as 
well as spatial variation within the gas play/shale pool are in their 
infancy. A quantitative assessment of the aggregated estimated 
recoverable resource of the gas play that can handle these complexities 
will require a statistically significant number of wells testing the gas 
play. As there is only a single production test within the gas play 
Origin decided upon a qualitative assessment approach instead to 
estimate the technically recoverable resource. 
 
   Factors considered in the qualitative assessment of technically 
recoverable hydrocarbon resource in the gas play were the SRV recovery 
factor range, the subsurface utilization factor range and surface 
utilization factor range. 
 
   Origin's Contingent Gas Resource Estimates for the Middle Velkerri B 
Shale Pool within EP76, EP98 and EP117 
 
   Origin has prepared a contingent gas resource estimate using 
probabilistic methods and reservoir evaluation data, in addition to 
regional seismic data. 
 
 
 
 
 
Assessment of 2C Contingent Gas Resource Estimates 
 for the Middle Velkerri B Shale Pool within EP76, 
 EP98 and EP117 as of 15 February, 2017(1) 
Measured and Estimated Parameters          Units    Best Estimate 
Area (2)                                   km(2)             1,968 
Original Gas In Place (OGIP)(3)             TCF               61.0 
Gross Contingent Resource(4)                TCF                6.6 
Net Contingent Resource(4,5)                TCF               1.94 
(1) Contingent resource estimates have been prepared 
 on a statistical aggregation basis and in accordance 
 with the Society of Petroleum Engineers Petroleum 
 Management System (SPE-PRMS). Contingent resource 
 estimates are those quantities of gas (produced gas 
 minus carbon dioxide and inert gasses) that are potentially 
 recoverable from known accumulations but which are 
 not yet considered commercially recoverable due to 
 the need for additional delineation drilling, further 
 validation of deliverability and original gas in place, 
 and confirmation of prices and development costs. 
 If the estimates were to be prepared in accordance 
 with COGEH, Falcon is highly confident that there 
 would be no change to the contingent resource estimates 
 above. 
(2) P50 area from the contingent resource area distribution 
(3) OGIP presented is the product of the P50 Area 
 by the P50 OGIP per km(2) 
(4) Estimated contingent gas resource category of 
 2C. There is no certainty that it will be commercially 
 viable to produce any portion of the resources 
(5) Net to Falcon's 29.43% working interest in EP76, 
 EP98, and EP117, net contingent resource number does 
 not incorporate royalties over the permits 
 
 
   As noted in Origin's press release the "The contingent resource 
estimates contained in [their] report are based on, and fairly 
represents, information and supporting documentation that have been 
prepared by Alexander Côté who is a full-time Origin employee 
and a Qualified Reserves and Resource Evaluator. Mr Côté is a 
registered professional engineer with specialised unconventional gas 
resource characterisation and development experience. Mr Côté 
has consented to the form and context in which these statements appear". 
Mr Côté is a member of the Association of Professional 
Engineers and Geoscientists of Alberta. 
 
   Suspension of Drilling Operations 
 
   On 14 September 2016, the Northern Territory Government introduced a 
moratorium on hydraulic fracturing, and subsequently established an 
independent scientific inquiry. Pending the outcome of this independent 
inquiry, Origin has requested a suspension of all drilling operations 
with the DPIR. We await their formal response to the request. 
 
   Philip O'Quigley, CEO of Falcon, commented: 
 
   "The submission of a discovery evaluation report supporting the 
existence of a material gas resource in the Beetaloo Basin coupled with 
Origin's best estimate assessment of a gross contingent gas resource of 
6.6 TCF for the Middle Velkerri B shale pool surrounding and adjacent to 
the Amungee NW-1H exploration well are exciting developments for Falcon. 
 
   Additional exploration and appraisal activity will be required to refine 
the pool size and better assess the recoverable resource range and 
ultimately the commerciality of the play. 
 
   However, it is interesting to note that in Origin's opinion the 
Marcellus and Barnett Shales in the USA are analogous, 
commercially-productive fields that are similar to the Middle Velkerri B 
Shale reservoir." 
 
   Origin's ASX/Media Release 
 
   Please refer to Appendix A for a copy of Origin's ASX/Media Release 
"Beetaloo Basin drill results indicate material gas resource". 
 
   This announcement contains inside information for the purposes of 
Article 7 of Regulation 596/2014 of the European Parliament and of the 
Council. 
 
   Further information relating to disclosure of resources 
 
 
 
 
 
Well Name                                           Amungee NW-1H 
Permit / location                                   EP98 (onshore Beetaloo Basin Northern Territory, Australia) 
Working interest in well                            Falcon 29.43% 
Product type                                        Shale gas 
Risks and level of uncertainty with recovery of     Risks and uncertainties include the lifting of the 
resources                                            Northern Territory moratorium on hydraulic fracture 
                                                     stimulation, completing longer-duration production 
                                                     testing above the 57 days conducted on Amungee NW-1H, 
                                                     reducing well costs with scale of activity, establishing 
                                                     gas sales agreements and building infrastructure to 
                                                     connect the resource to market. 
                                                     Contingent on the moratorium being lifted, additional 
                                                     appraisal drilling is planned (as per the work program 
                                                     associated with the permits), along with hydraulic 
                                                     fracture stimulation and testing to assess deliverability 
                                                     and move the project towards commercialisation. 
Significant positive and negative factors relevant  Significant positive factors relevant to the estimate 
 to the estimate                                     of the contingent resources include the successful 
                                                     well test at Amungee NW-1H which produced enough gas 
                                                     to surface to be of commercial interest; core and 
                                                     log data from Amungee NW-1H, Beetaloo W-1, Kalala 
                                                     S-1, Tanumbirini-1, McManus-1, Altree-2 and Walton-2 
                                                     provide convincing evidence of a significant volume 
                                                     of moveable hydrocarbons; and the Marcellus Shale 
                                                     (Pa., USA) and Barnett Shale (Tx., USA) are analogous, 
                                                     commercially-productive fields that are similar to 
                                                     the Velkerri B Shale reservoir. 
                                                     Significant negative factors include the lifting of 
                                                     the Northern Territory moratorium on hydraulic fracture 
                                                     stimulation, the limited number of wells on the Company's 
                                                     acreage, lack of a developed service sector providing 
                                                     uncertainty regarding estimates of capital and operating 
                                                     costs, developing hydrocarbon regulations and environmental 
                                                     legislation and the requirement to obtain social acceptability 
                                                     for oil and gas operations. 
Commerciality                                       Currently this project is based on a conceptual study. 
                                                     The economic status is undetermined at this time. 
                                                     The contingent resources will continue to be assessed 
                                                     as additional appraisal wells are drilled and tested 
                                                     in order to better evaluate the commercial potential 
                                                     of the play. After a sufficient number of wells have 
                                                     been drilled to demonstrate that the project is technically 
                                                     feasible and a development plan has been generated, 
                                                     economics can be run to determine commerciality of 
                                                     production. 
 
 
Amungee NW-1H Well Test Results 
 
Well name                                           Amungee NW-1H 
Permit                                              EP98 (onshore Beetaloo Basin NT) 
Working interest in well                            Falcon 29.43% 
Geological rock type of formation drilled           Organic rich shale (mudstone and siltstone) 
Depth of zones tested                               2170-2190 metres below sea level 
Type of test                                        Production test following hydraulic fracture stimulation 
Hydrocarbon phases recovered                        Gas (Approximate composition: methane 92%, ethane+ 
                                                     3%, carbon dioxide and inerts 5%) 
Flow rates and volumes                              Average rate (57 days): 1.1 MMscf/d 
                                                     Final production rate: 1.07 MMscf/d 
                                                     Cumulative production: 63 MMscf 
Number of fracture stimulation stages               11 stages (average size  100T/stage) 
 
 
 
   Advisory regarding forward-looking statements 
 
   Certain information in this press release may constitute forward-looking 
information. Any statements that are contained in this news release that 
are not statements of historical fact may be deemed to be 
forward-looking information. Forward-looking information typically 
contains statements with words such as "may", "will", "should", "expect", 
"intend", "plan", "anticipate", "believe", "estimate", "projects", 
"potential", "scheduled", "forecast", "outlook", "budget", "hope", 
"support" or the negative of those terms or similar words suggesting 
future outcomes. This information is based on current expectations that 
are subject to significant risks and uncertainties that are difficult to 
predict. Such information may include, but is not limited to, comments 
made with respect to the type, number, schedule, stimulating, testing 
and objectives of the wells to be drilled in the Beetaloo basin 
Australia, the prospectivity of the Middle Velkerri play and the 
prospect of the exploration programme being brought to commerciality, 
risks associated with the introduction of a moratorium, fluctuations in 
market prices for shale gas; risks related to the exploration, 
development and production of shale gas reserves; general economic, 
market and business conditions; substantial capital requirements; 
uncertainties inherent in estimating quantities of reserves and 
resources; extent of, and cost of compliance with, government laws and 
regulations and the effect of changes in such laws and regulations; the 
need to obtain regulatory approvals before development commences; 
environmental risks and hazards and the cost of compliance with 
environmental regulations; aboriginal claims; inherent risks and hazards 
with operations such as mechanical or pipe failure, cratering and other 
dangerous conditions; potential cost overruns; variations in foreign 
exchange rates; competition for capital, equipment, new leases, pipeline 
capacity and skilled personnel; the failure of the holder of licenses, 
leases and permits to meet requirements of such; changes in royalty 
regimes; failure to accurately estimate abandonment and reclamation 
costs; inaccurate estimates and assumptions by management and their 
joint venture partners; effectiveness of internal controls; the 
potential lack of available drilling equipment; failure to obtain or 
keep key personnel; title deficiencies; geo-political risks; and risk of 
litigation. 
 
   Readers are cautioned that the foregoing list of important factors is 
not exhaustive and that these factors and risks are difficult to 
predict. Actual results might differ materially from results suggested 
in any forward-looking statements. Falcon assumes no obligation to 
update the forward-looking statements, or to update the reasons why 
actual results could differ from those reflected in the forward 
looking-statements unless and until required by securities laws 
applicable to Falcon. Additional information identifying risks and 
uncertainties is contained in Falcon's filings with the Canadian 
securities regulators, which filings are available at www.sedar.com, 
including under "Risk Factors" in the Annual Information Form. 
 
   This announcement has been reviewed by Dr. Gábor Bada, Falcon Oil & 
Gas Ltd's Head of Technical Operations. Dr. Bada obtained his geology 
degree at the Eötvös L. University in Budapest, Hungary and 
his PhD at the Vrije Aniversiteit Amsterdam, the Netherlands. He is a 
member of AAPG and EAGE. 
 
   About Falcon Oil & Gas Ltd. 
 
   Falcon Oil & Gas Ltd is an international oil & gas company engaged in 
the acquisition, exploration and development of conventional and 
unconventional oil and gas assets, with the current portfolio focused in 
Australia, South Africa and Hungary. Falcon Oil & Gas Ltd is 
incorporated in British Columbia, Canada and headquartered in Dublin, 
Ireland with a technical team based in Budapest, Hungary. 
 
   For further information on Falcon Oil & Gas Ltd. please visit 
www.falconoilandgas.com 
 
   About Origin Energy 
 
   Origin Energy (ASX:ORG) is the leading Australian integrated energy 
company with market leading positions in energy retailing (approximately 
4.3 million customers), power generation (approximately 6,000 MW of 
capacity owned and contracted) and natural gas production (1,093 PJ of 
2P reserves and annual production of 82 PJe). To match its leadership in 
the supply of green energy, Origin also aspires to be the number one 
renewables company in Australia. 
 
   Through Australia Pacific LNG, its incorporated joint venture with 
ConocoPhillips and Sinopec, Origin is developing Australia's biggest CSG 
to LNG project based on the country's largest 2P CSG reserves base. 
 
   www.originenergy.com.au 
 
 
 
 
 
Glossary of terms 
2C           Best estimate of a contingent resource 
AIM          London Stock Exchange's international market for smaller 
              growing companies 
ASX          Australian Securities Exchange 
BCF/km(2)    Billion cubic feet per square kilometre 
COGEH        Canadian Oil and Gas Evaluation Handbook 
CSG          Coal seam gas 
DPIR         Northern Territory Government's Department of Primary 
              Industry and Resources 
EP           Exploration Permit 
JV           Joint Venture 
KM(2)        Square kilometres 
LNG          Liquefied natural gas 
MMscf        Million standard cubic feet 
MMscf/d      Million standard cubic feet per day 
MW           Megawatt 
OGIP         Original gas in place volumes 
SRV          Stimulated rock volume 
TCF          Trillion cubic feet 
T/stage      Ton per stage 
 
 
   Neither the TSX Venture Exchange nor its Regulation Services Provider 
(as that term is defined in the policies of the TSX Venture Exchange) 
accepts responsibility for the adequacy or accuracy of this release. 
 
   To view Appendix A - Origin's ASX/Media Release, please visit the 
following link: 
 
   http://cnrp.marketwire.com/cnrp_files/20170214-Appendix_A_Origins_ASXMediaRelease.pdf 
 
 
   Contact Information 
 
   Falcon Oil & Gas Ltd. 
 
   +353 1 676 8702 
 
   or 
 
   Philip O'Quigley 
 
   CEO 
 
   +353 87 814 7042 
 
   or 
 
   Anne Flynn 
 
   CFO 
 
   +353 1 676 8702 
 
   or 
 
   Davy (NOMAD & Broker) 
 
   John Frain / Anthony Farrell 
 
   +353 1 679 6363 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Falcon Oil & Gas Ltd. via Globenewswire 
 
 
  http://www.falconoilandgas.com/ 
 

(END) Dow Jones Newswires

February 15, 2017 02:01 ET (07:01 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.

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